Poverty Alleviation: An Intention Of Islamic Economics

Poverty is handled as WMD (weapon of mass destruction) of recent world. Eradication of it bears very significance. The financial programs like capitalism and communism have offered variety of devices for the alleviation of the poverty from the world. However, these excessive ideologies did not fulfill the necessity of the folks. Non-public possession of property, laissez-faire coverage of capitalism and sophistication battle, dialectical materialism, state possession of property of communism did not contact the actual reason behind poverty. This case necessitates searching for the chances of Islamic economics in assuaging poverty. The goal of poverty alleviation could be attained, in an Islamic Financial system via lowering the inequality. It by no means means attaining equality however fairness and justice within the revenue and wealth distribution. Islam eliminates absolutely the inequality which arises from unequal distribution of revenue, however relative inequality emerges from equitable distribution of revenue and wealth.

First a part of this text has given a small introduction to each standard economics and Islamic economics. Then it offers an image of poverty of present world and Islamic perspective of poverty. Then Islamic economics devices to alleviate poverty reminiscent of zakat, sadaqa, qard hasan, ganima, khums, fay, jizya, mudaraba, musharaka, prohibition of curiosity, abolition of extravaganza, prohibition of hypothesis and hoarding have been talked about in briefly. Affect of Islamic financial devices on marginal propensity to eat, multiplier, value funding and manufacturing have been handled.

The books and articles I referred for this text are Dr. Dr.Sabahuddin Azmi’s Islamic Economics, S. M. Hasanuzzaman’s Financial operate of an Islamic state (The early expertise), In the direction of understanding the financial system of Islam written by Dr.P Ibrahim and Introduction to the financial system by Moulavi.M.V.Saleem.


No person can undermine the significance of economics which is a social science that research the manufacturing, distribution, commerce and consumption of products and providers. This very significance of economics resulted in emergence of various financial programs on this planet and all of these financial programs declare that they’ll fetch financial welfare. These dominating and outstanding financial system’s failure to perform financial justice, prosperity, the eradiation of the inequality and poverty make vital another financial system which may efficiently make a hunger free and poverty free world.

Definition of Economics

Social scientists have developed numerous definitions of economics. Lionel Robinson’s shortage definition of economics is most accepted amongst them. Based on Robinson “economics is a science which research human conduct as a relationship between ends and scarce means which have various makes use of” This definition is predicated on two factors that are shortage of sources and the by no means ending wants. However in actuality former is a delusion. The survey carried out by UNO exhibits which might be sufficient sources for 20000 million folks on earth we have now solely 6000 million folks on earth residing now. Latter level ‘by no means ending wants’ can be incorrect as the will and greed of the person is limitless however the want is countable and controllable.

Definition of Islamic Economics

As a system of life Islam has not left any space of human life with out steering. Whether or not it’s non secular, particular person, social, economical or political Islam provides clear minimize tips. By contemplating the financial tips of Islamic sources, Islamic economists have developed plethora of definitions. Derivation of every definition of Islamic economics is predicated on steering given within the primary sources of Islamic shariah that are Quran and hadith.

Based on Yusuf Ibrahim, professor of Islamic economics, Qatar College “Islamic economics is a science learning the steering of the human conduct in direction of the usage of sources to fulfill the wants”. This definition is predicated upon the next information.

1. The sources are sufficient for satisfying the wants.

2. However the sources needs to be protected against the waste, and improper use.

three. The human conduct in direction of the sources needs to be managed by divine injunctions.

four. Solely authorized wants, wants that construct life on the earth, needs to be glad.

5. Unlawful wants (wishes), which destroy life on earth, shouldn’t be glad; they’re by no means ending and by no means glad.

Islamic financial system, a normative financial system, has been constructed upon sure basic Islamic philosophies. Based on Quranic teachings actual and absolute possession of the wealth belongs to the creator of the identical, Almighty God. Quran says “To Allah belongs to the whole lot within the sky and on the earth” (2:284).Position of the person is taken into account as trustee who’s to handle the belief, i.e. wealth based on the directives of the actual proprietor; God. Quran clearly states “And spend of that the place of hath made you trustees” (57:7). So man has been granted

conditioned and restricted possession.

One other Islamic philosophy is common brotherhood and equality of males as their creator is one and oldsters are identical. Therefore distinction primarily based on colour, caste, creed, races don’t undergo at any value. This idea induces the folks for cooperation and participation of their all efforts as a substitute of dishonest, exploiting and making fraud one another. One other facet of Islamic philosophy is the religion within the Day of Judgment after loss of life. Within the life after loss of life man is accountable for his deeds on earth. The implication of this religion is that financial selections one makes in world are to be judged based on the norms Allah has laid down.

These are the revolutionary factors which differentiate Islamic economics from the liberal, capitalistic, imperialistic, mainstream, usurious financial system and communist, class battle, state dictatorship financial system. Islam constructs a simply world on the spirit of eternal divine ideas.


Evil of any economic system is poverty. The presence of begging palms in an economic system pulls that economic system into a long time again. Poverty midst lots is the problem confronted within the trendy world. Influence of the poverty can’t confine into hunger solely, however poor folks, other than hunger, struggling restricted revenue which results in inaccessibility of fine training it disables them for difficult careers which requires variety of years lengthy training. Absence of nutritious meals ends in extra youngster morality amongst disadvantaged sections. Since restricted entry for data and data these are prevented from market and alternatives.

Each nation and worldwide organizations like World Commerce Group, World Financial institution and Asian Growth Financial institution exhausting work to assemble the nations and world on the foots of self sufficiency respectively. Mission of the World Financial institution is described as world poverty discount and enchancment of residing requirements. Common Council of UN has declared October 17 as Worldwide day for the eradication of poverty. It exhibits how critically they took poverty as an issue

However, it’s questioning that out of 6.1 billion world inhabitants greater than 1 billion are discovering their livelihood in lower than $1 per day and nearly three billion on lower than $2 per day. You may be provoked that 74% of complete revenue of world is shared by the 20% of the elite class of the world. It’s heartening you that there are nations whose nationwide revenue is much less $800 and morality of under 5 years age youngsters is about 26%.It’s worrying that 110 million major faculty age youngsters are out of college and 60 p.c of them are women.


Poverty and Islamic Economics

Beneath Poverty Line (BPL) fixes in Islamic economics system on the premise of possession of nisab, which restrict makes one eligible for the cost of zakat Whosoever wealth on or over the nisab is liable for the cost of zakat. These wealth is under nisab are zakat recipients and they’re handled as poor. Therefore, in Islamic economics, the dimensions of disadvantaged come below BPL might be giant. Hunger and inaccessibility of meals, shelter, cloths and training couldn’t undergo in an Islamic economic system which goals human falah, i.e. human welfare. It doesn’t assist any financial instrument that results in the deprivation of the person. Since poverty emerges in an economic system because of numerous causes so wiping out of those causes is primarily vital.

Restricted revenue, unequal distribution of revenue and wealth, misdistribution of sources, regional disparities, unemployment, social injustice, and decreased investments …and so forth are a few of the obstacles in the way in which of attainment of self-sufficiency and welfare. Islam considers the achievement of primary wants of each member of society is financial, ethical in addition to non secular obligation of the ruler. Listing of the essential items extends from conventional meals, clothes and shelter to seasonal clothes, private attendant to disabled individual, and expenditure on marriage of poor and expenditure on total household of poor, that are intensified by students infrequently and more likely to prolong the listing time to time for the welfare of the citizen. Islamic financial system introduces a bunch of divinely guided devices which carry to an finish of poverty and construct

poverty much less world.

Islamic Financial Devices to remove poverty

It’s suggested to Muslim residents in an Islamic county, because the a part of imagine, to follow sure issues of their life, a few of them are obligatory nature and the remainder are voluntary nature. The follow of those could have huge financial implications other than the reward of God. Non Muslim residents additionally must make sure obligatory funds, which have financial impacts, because the a part of their citizenship within the Islamic nation. Obligatory duties and agreements of residents are ruled by the Islamic nation and violation of any half wouldn’t undergo Islamic state. Along with these features there are different issues the Islamic state has to hold out just like any nation does for the welfare of residents. Each optimistic and detrimental measures have really helpful by Islam for wiping out the rationale of poverty.

Optimistic Measures

There are quite a few Islamic orders and injunction to carry out sure issues which have immense affect on economies justice, prosperity and development. Necessary divine injunctions amongst them and their affect upon the economic system are briefed under.


Zakat is the yearly obligation of rich Muslims to poor and it’s the share of have-nots within the property and wealth of the wealthy. Quran commends “set up worship and pay the poor his due (zakat) and obey the messenger”. Technically we will name it as non secular tax. It’s imposed on these types of wealth which have the capability to develop in worth or in any other case produce additional, is having the custody of complete yr and have exceed a sure minimal worth referred to as ‘nisab’. Quran has acknowledged the eight particular heads for the distribution of zakat.

As a result of divine spirit for the efficiency of zakat, probabilities for evasion are much less. The imposition of zakat on idle wealth urges the house owners for the productive and worthwhile employment of idle wealth which will increase the wealth of economic system and once more the share of zakat.


Sadaqa is the one of many voluntary financial instrument. No restrict and eligibility standards for performing contributions to needy. It may be divert, other than the eight heads talked about for the distribution of zakat, to any needy. and it’ll strengthen what financial implications emerged by zakat.

Qard hasan

It’s an association of curiosity free loans for unproductive functions or for the needy to satisfy the bills like hospital bills, residence bills and training bills and so forth that are don’t make any earnings. So it isn’t capable of cost any materials profit, like revenue share, from qurd hasan. These are offered because the a part of kindness to human beings. In an Islamic economic system people and establishments like Islamic banks will supply one of these loans anticipating the reward of Allah. Availability of qard hasan reduces the monetary burdens like curiosity, of disadvantaged.

Revenue and loss sharing

Islam formulates revenue and loss sharing because the device of commerce contracts instesd of curiosity. The motivation behind it’s the cooperation amongst the folks. In revenue sharing there are various kinds of financing reminiscent of mudaraba (revenue and loss sharing) and musharaka (participation) …and so forth

Mudaraba is the settlement between each capital proprietor and entrepreneur to share the revenue arises from the enterprise and in case of loss capital proprietor’s capital reduces and entrepreneur’s effort and time free. Musharaka is the settlement to share revenue and loss the place all contributors take part in administration of enterprise. Each mudaraba and musharaka assist the folks, who’ve inadequacy of capital, to have interaction in enterprise, manufacturing and contribute their share into the welfare nation and earn for their very own.

Ganima (battle booty), Khums (one fifth) and Fay

Ganima is the property Muslims seize from the enemy. 4 fifth of the ganima is split among the many combating military and one fifth (khums) of the complete ganima transfer to state fund, which is earmarked for the particular beneficiaries talked about in Quran. Fay is the property receives from the enemy with out precise combating. This supply of state income is generalized for the frequent good of the complete inhabitants and public welfare.

Kharaj (Land- Tax)

Land-Tax, a income of state, is the levy imposed on land produce. That is truly the lease for the usage of worth of agricultural land. The speed of kharaj and technique of assortment could be declared by state infrequently as there isn’t a route of Quran and custom of prophet on this regard.

Jizya (Ballot tax)

Jizya (poll-tax) imposed on the non-Muslim residents of Islamic nation for securing their wealth, property and lives from harm. It helps them to contribute their ability, expertise, well being, wealth and property for the prosperity of the nation

Waqf (Endowment)

Waqf (endowment) is common income which is earmarked and devoted fund of Muslim for supporting charitable and welfare actions

State possession on uncultivated land:

Any financial instrument that hinders productiveness is dangerous to economies affluent. Based on Islamic shariah, if a land is remained uncultivated three consecutive years result in shifting of possession of that land from present proprietor to different who is prepared for domesticate the land and produce. Prophet (pbuh) mentioned “The unique rights of possession in land are God’s and the prophets after which yours afterwards. However he who revives any lifeless land acquires the proper of possession to it”. There’s an one other establishment, iqta, increase the circulation and tax income of the state by transferring the uncultivated/lifeless land to somebody in return for ushr or khraj.

Mixed possession of pure sources:

Particular person possession of pure sources like fireplace, water, pasture and salt are restricted by the Islamic shariah. Folks have mixed possession in these pure sources which needs to be accessible to anybody. This rule permit anybody to make use of the profit derives from the pure items and be sure that no one is away from the pure items that are straightforward to get to with none exhausting work.. Listing of pure items, along with talked about items, could be prolonged into extra items in time to time. Prophet (pbuh) mentioned “individuals are joint house owners in water, pasture and fireplace”.

There are different sources of revenues like property of deceased with no authorized inheritor, misplaced and located with no claimants and extra taxations.

Damaging Measures

There are some prohibitions of God which has affect on the economies prosperity and welfare of each males of nation.

Prohibition of curiosity

Curiosity, no matter type, has been contemned by Allah and His messenger. Quran says “Allah has permitted commerce and hath prohibited riba” (curiosity). Islam would not assist curiosity however revenue and loss sharing. Each monetary transactions of Islamic economic system needs to be freed from Curiosity. However absence of curiosity in an Islamic economic system would not create any hindrance to prosperity however flourish the prosperity.

Prohibition of speculative devices

Devices which have no benefit to actual economic system reminiscent of futures and choice will not be permitted in Islamic economic system. Inventory market devices like day buying and selling, marginal buying and selling are prohibited, both. Absence of those devices within the economic system reduces hypothesis which is hurt to the complete economic system.


The implementation of shariah tips we mentioned above in an economic system result in variety of optimistic fruits which make the state free from each type of poverty.

Elevated redistribution of revenue and wealth will lead to, when the folks carry out the non secular obligations like zakat, donation, waqf, inheritances, fithr zakat and kaffarath and so forth… It results in move of wealth and cash from wealthy to poor. Thus the focus and accumulation of wealth in a couple of palms come down. Poor and needy spend roughly eighty p.c of their earnings to meet their primary wants. Economically Marginal Propensity to Devour (MPC) of the poor is bigger than center and excessive class. A big portion of no matter comes into useful of poor will move to economic system for consumption of primary items; it result in extra demand for major items after which it consequence within the elevated manufacturing of primary items. It’s tough to limit luxurious consumption and manufacturing utterly by regulation and power. However the elevated price of redistribution of wealth and revenue improve the demand for primary items and reduce the demand for luxurious items. Routinely it reduces the utilization of sources for the manufacturing of luxuries. Consequently, pure sources use for the manufacturing of primary items and for the advantage of public welfare

This elevated redistribution of wealth to poor permits them to get the accessibility of fine training and nutritious meals. Elevated data and expertise assist the poor to get good jobs and earn. This raises the complete poor household and dependence to heights. In flip, improve of revenue greater than a sure restrict make them succesful for performing zakat and different voluntary donations for the sake of the advantage of have-nots. Rise within the redistribution assist to cut back the hole between haves and have-nots and convey financial justice to all residents.

Elevated MPC of poor because the redistribution of revenue ends in extra multiplier impact in economic system that fuels extra revenue to the general revenue of economic system that assist the poor part of individuals to lift their per capita revenue and residing requirements.

Based on Professor Keynes, funding depends upon two variables that are present uncommon of curiosity and the marginal effectivity of capital or anticipated revenue price. Funding would happen provided that the anticipated price of revenue exceeds of curiosity. As a result of absence of curiosity, in an Islamic economic system, solely the dimensions of anticipated price of revenue of revenue would be the determinant of funding.

Speculative motive of cash and liquidity idea of cash could have no place in an curiosity free economic system which reduces funding. However the presence of solely anticipated price of revenue will lead to investments, even in low price of anticipated price of revenue to extend their precept quantity and to keep away from the deterioration of principal via zakat. The elevated funding raises the manufacturing, employment, wages and general nationwide revenue of economic system. It flows wealth to poor and raises their financial standing.

Fisher’s amount idea which states that amount of cash impacts the value and worth of cash. It signifies that improve within the provide of cash will proportionately improve the value in economic system however the output is not going to improve. However within the case of Islamic economic system cash shouldn’t be equipped with out making improve within the output. The central financial institution and business banks of Islamic state improve the cash provide via making funding contracts on the premise of revenue and loss sharing. So each move of cash into economic system ends in output development with out making proportionate hike in value. It’s useful to the poor to get want issues at affordable value


Means of eliminating poverty in Islamic economic system is straightforward. Religion within the oneness of God (tawheed) motivates to the efficiency of zakat and revenue and loss sharing and avoiding curiosity and extravaganza. Elevated redistribution and productiveness are the end result of those devices which helps lastly to realize alleviation of poverty.

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